Resource Investing:
A Golden Opportunity
Hand me
that hammer!
Brad Cooke
June 30, 2004
You know gold
fever has hit when you see grown men scrambling on their knees
for the chance to find some of this noblest of metals. It's not
a sight easily forgotten. I was working one summer as a geological
consultant for a small mining company in BC. My field crew had
just discovered an outcropping of quartz vein that contained
high grade streaks of visible gold.
When I called
the President to tell him of our find, he said he would come
up to take a look. Little did I realize what he had in mind.
When he turned up a few days later, it was with an entourage
of European investors and their wives. Never mind the dinner
jackets and high heels, they were ready for adventure. One gentleman
in particular stood out, a particularly refined and elderly British
squire, replete in shooting attire and with a beautiful bride
(45 years his younger) on his elbow.
Well, they
were all very eager to see this new gold discovery of ours. Only
one problem I had neglected to tell the boss where it was located
at the top of an 800-foot cliff. Undaunted, our gentrified English
guest insisted he did not come all this way to miss out on the
"action."
So off we went, a veritable parade of four-wheel drive vehicles.
Undeterred by a brief but tortuous trek through the bush, we
arrived at the cliff-face where I had been hoping they would
take one look down and do an about turn. Alas, not so. But there
was no way I was going to let them out on the cliff face to sample
the discovery so I volunteered to edge out along the vein and
hammer off some showy samples of visible gold.
The first piece
only had one or two specks and when I tossed it over to them,
it did not quite make it far enough and went tumbling down the
cliff. Some more heavy hammering, though, loosened up a large
chunk of vein with a gorgeous splash of bright gold all over
it. As soon as they saw what I had in my hand, they were out
on that ledge in a flash. Down on hands and knees, risk... What
risk? Prying off piece after piece, "Hand me that hammer!"
Thankfully,
we did not lose anyone, and yes they got their trophy specimens.
But, it made me realize just how strong a pull gold can have
on people, regardless of their bearing.
The new bull
market for commodities brought on just such a fever to investors.
From March 2001 to January 2004, gold bullion enjoyed a 70% run
from US $252 to US $428 per oz. Senior gold stocks jumped 150%,
small cap companies doubled and tripled. And then the air went
out of the balloon. Reality set in and gold fell back to US $375.
Stock trading volumes dropped and some investors were left holding
losses and wondering if the party was ending just when they got
through the door.
Having lived
through two previous commodity cycles, I can tell you the downslide
is always a rough ride, but there is nothing like prior experience
to prepare you for times like this. The bad news is that we probably
have a couple more months of volatile commodity prices before
the bull trend re-asserts itself. The good news is the fundamentals
for gold are strong and getting stronger.
After more
than two decades of global dominance in the currency exchange
markets, the US dollar has finally entered into a secular bear
market. The high tech crash in 2000, the tragic events of September
11, 2001, the escalated spending on the American military, all
these things have conspired to push up US government spending
and foreign trade to all-time high deficits, all the while printing
dollars and slashing interest rates to 40-year lows in order
to get the economy going and better service the mounting debt.
There are only a very limited number of certain outcomes from
such an inevitable change in American monetary policy from a
strong dollar to a weak dollar, and one of them is higher gold
prices.
Like the distinguished
British gent who saw a golden opportunity and pounced on it,
so I think investors are now looking at just such a juncture.
Corrections are for buying, not selling. Even from the edge of
a precipice, he could see the gleam in my hand is that US $500
gold I can see, looking into next year?
June 29, 2004
Brad Cooke
Bradford J. Cooke, M,Sc., P.Geo.,
President, Director and C.E.O. of Canarc Resource Corp.
A professional
geologist, Mr. Cooke has more than 28 years experience in geology
and mineral exploration. He holds two university degrees in geology
and worked with the Ontario Department of Mines, Noranda, Shell
and Chevron. Between 1983 and 1987 he owned and operated Cooke
Geological Consultants, finding and developing several gold vein
deposits, and effectively reactivating interest in the Bralorne
gold district, he founded Canarc and has overseen the growth
of the company since that time, participating hands-on in the
acquisition and exploration of strategic gold properties throughout
the Americas. Canarc Resource Corp. website.
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321gold Inc
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